UPMC Hamot and Medicor Associates, a hospital and a cardiology group located in Erie, Pennsylvania, have settled allegations that they violated the Anti-Kickback Statute and the Stark Law, also known as the Physician Self-Referral Law. Generally speaking, the Anti-Kickback Statute prohibit hospitals, physicians, pharmacies, nursing homes, durable medical equipment (DME) companies, pharmaceutical (drug) companies, medical device manufacturers, and other medical providers from paying or receiving kickbacks, remuneration, or anything of value in exchange for referrals of patients who will receive treatment paid for by government healthcare programs such as Medicare and Medicaid. The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement. Both laws are designed to keep medical treatment decisions free from the influence of potential monetary gain. As the Department of Justice has explained, “[p]atients are entitled to be sure that the care they receive is based on their actual medical needs rather than the financial interests of their physician.”
According to the allegations, from 2004 to 2010, when Hamot Medical center was worried about competition for patients from nearby St. Vincent Hospital it allegedly created sham directorships for doctors employed by Medicor Associates, enabling Hamot to pay the doctors more than they otherwise would make, in exchange for their referrals. The 12 doctors that made up Medicor were paid upwards of $2M per year to refer patients to Hamot for a range of cardiac procedures.
The suit was brought by a whistleblower, Dr. Tullio Emanuele, who worked at Medicor from 2001 to 2005. The United States had declined to intervene in this case, which, under the False Claims Act, allowed Dr. Emanuele to receive a higher award. Dr. Emanuele will receive slightly over $6M, or about 28% of the total recovery.
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